Epicor plays clever to steer course between ERP giants

Enterprise resource planning (ERP) systems are the engine rooms of modern businesses but the field has changed as giants Oracle and SAP attempt to suck up every niche vertical opportunity to show growth and join others like Microsoft emphasise integration with massive software stacks. Competing against these behemoths isn’t easy but Joe Cowan, CEO of Epicor, has been around technology companies for a long time and he is a man with a plan.

Cowan has a lifetime of experience after management roles including spells at ERP companies such as Manugistics and Invensys/Baan. I spoke to him by phone about the challenges of the sector.

At 43 years old, Epicor itself is a veteran of the sector under various names. Its history is complex and as with so many industry survivors it has morphed through mergers and acquisitions. But it remains a sizeable player with about $1bn in annual revenue and is particularly visible in areas like distribution and manufacturing as well as other sectors, covering customers that extend in scale from midsize to enterprise.

In his time, Cowan has overseen quite literally a world of change. “I’m an electronics engineer, spent all my life working with computers and software,” he says in a southern accent that has its roots in Alabama, maybe burnished with later stints in Austin, Texas and Atlanta, Georgia. But that world is being impacted by trends such as globalisation and cloud technology.

“We’re starting to see even the midmarket being touched by globalisation,” he says. “A company that might have been UK-focused, they’re probably buying and selling internationally or have a supply chain that might stretch out internationally.”

That’s also an opportunity though and a focus for Cowan who, since he took the CEO job in October 2013, has been making changes to how Epicor supports businesses everywhere.

“We had 11 support centres around the world and they didn’t communicate with each other and now we can follow the sun,” he says.

New entrants to the sector are coming at it from a ‘cloud-first’ perspective and Cowan insists that Epicor is not pretending that’s no threat.

“The cloud is spawning new companies. Typically you get a lot of older technologies and products and that opens the door for true cloud and SaaS. It’s crossing the chasm; the whole cloud and social thing is starting to touch our industry.”

But Epicor has been buttressed by an architecture that lets it offer true multi-tenancy or on-premise provisioning from the same Microsoft .NET platform.

“You may think of us as one of these older consolidation-type plays [where ERP firms are rolled up through M&A] but we have new technology embedded. Forty-six per cent of revenue is maintenance and that’s your goldmine, you have to protect that. But on a transition path with a new customer we’ll all go all out for SaaS. Some look, not as many are buying but we’ll let them make the choice.”

How about NetSuite, the aggressive cloud ERP company that has cut a swathe in the SMB/SME sector?

“It’s worked up until now for NetSuite: we see ’em and we compete with ’em. They have a very strong financial product but then if you start looking at what you do in the plant where you need a specific function for that vertical… that is something they don’t have.”

Epicor “plays underneath” Oracle and SAP, Cowan concedes, but those companies have “tended to have a difficult time moving down”. He refers to a German chemical company with 50 to 70 plants across the world that has “a problem pushing SAP down because it takes two years to deploy. We’re quicker to implement for midmarket and tier-2 companies”.

Cowan has presided over company sales in the past, most notably when Autonomy bought content management company Interwoven, but says he is not under instructions to pretty up Epicor for a sale the highest bidder.

“I come in not with the intent to paint the pig and sell it. I come in with the attitude of ‘here’s an asset’ and I want to add some value. Anybody can take a lot of cost out - you’re really playing with the bottom line and I know how to do that... you can move offshore to India or play that game. But I have my own process which is look at where people are going to spend money and see where your strengths and weaknesses are and see where the competition’s strengths and weaknesses are.”

Indeed, Epicor might well make more acquisitions itself as Cowan attempts to steer a course between giants and the rapids of business and technological change.